Software Deployment in Nigerian Banks Essay Example

in the community cannot be quantified. Some of the sharp practices that bankers have been accused of include using customers' names without their consent to obtain foreign exchange and engaging in inappropriate and unauthorized use of foreign exchange, such as round tripping from the Inter-Bank Foreign.

Exchange Market (IFEM) is involved in various illicit activities such as falsifying accounting records, exploiting customers by charging excessive commissions, issuing multiple financial statements, misusing financial derivatives, maintaining high lending rates despite the lowering of the Minimum Rediscount Rate (MRR), and disregarding other monetary policy measures. Additionally, banks are accused of bribing government officials to deposit their agencies and parastatals' funds with them.

The New Order However, amidst the various fraud types in the Nigerian banking sector, there exists one that has gone unnoticed and has served as a means for numerous bankers to amass overnight wealth. What exactly is this form of fraud? The banking industry has made significant advancements from the era of manual ledger entries. Presently, banks across the globe have fully automated their processes and centralized their databases, enabling access to all information at every branch. Furthermore, banks now extend their services via the internet and a single network.

Studies on Nigerian banks investigate how the strategic use of information technology (IT) can make them competitive both domestically and globally. Research indicates that competitive rivalry, customer acquisition/retention, cost reduction, and alliances/mergers have the potential to significantly enhance competitive advantage in bank operations through the strategic application of IT.

In Nigeria, all banks have embraced information technology (IT) to improve efficiency. Even older banks, impacted by newer and more technologically advanced competitors, are upgrading their equipment. However, this

technological progress has also led to fraudulent activities within the Nigerian banking sector. IT managers and other staff in IT departments, with the knowledge of relevant personnel in other departments, are responsible for this misconduct.

Unfortunately, banks' IT managers in the Nigerian economy have not fully recognized the importance of their role. This is evident in their decision to engage in bribery, corruption, and collusion with software vendors when implementing new bank software. Furthermore, it is regrettable that these IT managers and their accomplices have failed to understand the significance of their role beyond simply purchasing banking software for their organizations.

Negative Attitude of CEOs to IT: Many chief executive officers of banks show a lack of interest in the implementation of banking software, leaving it to their IT departments. Their interest only arises when it is time for a site inspection trip abroad, possibly for the benefits they will receive.

BusinessWorld Intelligence reports that numerous banks have suffered significant financial losses due to the selfish actions of IT managers and their associates. A new scandal involving a bank on Adeola Hopewell has been uncovered, revealing corrupt dealings between certain senior officers of the bank and a software vendor. The investigation has uncovered that the bank's vice president of the IT department, who previously worked at Oceanic Bank, was the mastermind behind this fraudulent scheme.

According to our report, this individual had a pre-existing preference for an Indian software and had accepted bribes from the vendor. Interestingly, before even joining the bank, he had already proposed the idea of switching to this software. During a breakfast meeting for the bank's retail banking division, the vice president emphasized that out

of all available banking software options, only this Indian software is capable of effectively fulfilling the bank's vision and mission.

Despite efforts to convince other top management staff of the bank, the deal became known to a competitor during the bidding exercise. The competitor promptly informed the bank's managing director about the importance of transparency in the process. Additionally, a protest letter was sent to the bank's IT committee, questioning the vice president's unilateral decision-making regarding which software to use. At this point, significant amounts of money were allegedly exchanged to ensure the success of this questionable transaction.

During the midst of the intrigues, the managing director organized a meeting for all stakeholders involved in the exercise. In this gathering, he specifically cautioned them about the potential consequences of colluding with any vendor. He made it clear that complete transparency was paramount throughout the entire process. As a result, the "dirty dealers" had no choice but to comply with the desires of the highest rank within the bank. Eventually, approximately 40 principal officers scrutinized the exercise extensively. Consequently, a non-Indian banking software company emerged as the successful bidder.

There has been a development in various banks, including this one, where they have undergone a similar experience in implementing new banking software in their organizations. In order to successfully combat fraud, it is important to understand the background of insider fraud and take appropriate preventive measures. The following are some warning signs of fraud and simple controls that banks can implement to prevent insider abuse.

An international analyst states that insider fraud can vary in frequency, but larger thefts tend to occur in a repetitive, cyclical, and habitual manner. In

cases of bribery and corruption by employees, a regular routine is typically established, which involves being physically present on-site daily to conceal their actions. Insiders usually choose to carry out their illegal activities within institutions that lack effective tracking of employees' movements and schedules. They specifically target positions that are considered "important and special" and require the same employee to be present every day.

The analyst highlighted various preventive measures to address embezzlement, which include rotating employees' schedules and work assignments unpredictably, segregating duties or involving multiple individuals or departments in transactions, requiring employees to take two consecutive weeks of annual leave, and implementing independent internal and external audit programs emphasizing strong internal controls and compliance with written policies. It is worth noting that many embezzlers have previous experience with other financial institutions in the same capacity. Conducting background checks on all new employees is crucial for effective fraud prevention, as it has been observed that institutions that neglect such checks hinder investigation and prosecution efforts. Therefore, it is recommended to conduct appropriate background checks on all new employees and inform them about the institution's policy of conducting credit checks on both applicants and employees at unspecified intervals.

Taking measures to safeguard banks from fraud and insider abuse is crucial for protecting the assets and reputation of the institution. Although this objective may not yield immediate profits or instant business gratification, establishing a foundation to prevent fraud and abuse is an essential precautionary step for ensuring the long-term well-being of any financial institution.